B2B Payments

How Supplier Churn Can Stifle B2B Payments Automation: Symbeo

Accounts payable (AP) automation certainly has the potential to transform the invoice-to-pay process by allowing employees to turn their attention from monotonous, manual tasks to more value-added ones. The key in AP automation is to have technology that is able to handle a range of scenarios: for instance, being able to automatically process invoices, regardless of whether they come in as a paper document, PDF or true eInvoice. The same goes for vendor payments, with technologies working to optimize payment rail choice based on what works best for both supplier and buyer.

Transforming AP departments in this way, though, is no straight-forward task for more reasons than one. Research suggests that CFOs and other finance execs have different expectations and definitions of automation that can throw digitization initiatives off course. A recent report from Hyland that examined accounts payable trends found this to be the case, with executives citing a high volume of paper invoices to be another key factor tripping up AP automation efforts.

However, for large multinational enterprises, Matt Wright, president of invoice automation company Symbeo, said there is another major factor behind why businesses often struggle to fully automate their accounts payable operations.

“For large corporates, supply chains are in some level of constant churn,” he explained to PYMNTS in a recent interview. “Old suppliers are constantly dropping off, and new suppliers are continually being added. It’s a unique challenge to automation.”

That’s because automation technologies typically rely upon the repetitiveness of tasks to automate them. Automation looks for commonalities, Wright said, but when vendor churn is high, the mechanisms by which invoices are received and processed, and by which vendor payments are made, are constantly in flux.

Migrating one’s vendor base to eInvoicing is often an important step in optimizing the procure-to-pay process, yet such a high vendor turnover rate often means that suppliers continue their use of paper invoices when first engaging with a new corporate customer.

Another challenge linked to high vendor turnover rates is the enterprise’s focus on what Wright described as the 80/20 rule: 80 percent of a company’s spend might be with 20 percent of the vendor base. Automation and optimization efforts tend to focus on that 20 percent of suppliers, he said. Meanwhile, the remaining 80 percent of suppliers is constantly changing and fails to grab the attention of executives working to automate invoice processing and B2B payments.

“Procurement organizations are engaging with [the 20 percent of vendors] because they tend to be the bigger, longer-term relationships,” said Wright. “They’re ripe for digitization because they have those strategic relationships with the supplier. But you can have high invoice volume with low transaction value with a non-strategic supplier, and that creates a big problem by virtue of the fact they send a lot of paper invoices, they have a lot of payments, but they’re simply not strategic enough to hit the [radar] of a sourcing team or someone that wants to invest the energy in digitizing them.”

For companies looking to improve their invoice processing times, reduce the number of exceptions and accelerate supplier payments, automation efforts may focus on a smaller, core group of vendors to achieve these goals. These are main focuses for executives surveyed by Hyland, with 87 percent agreeing that the time it takes to approve invoices and payments is a key metric to analyze performance.

However, AP automation remains, in many cases, incomplete. According to Hyland, researchers found that executives have an over-reliance on their ERP systems to automate AP processes, as well as a lack of consistent understanding of what “fully automated” actually means across organizations.

This is an opportunity for AP automation technology providers to fill in a market gap. Symbeo recently announced a collaboration with Nvoicepay, which sees Symbeo automating invoicing and Nvoicepay optimizing B2B payments with a focus on large multinational organizations that have high supplier turnover.

Wright noted, though, that the “big bang” approach to AP automation that is, wholly transforming a large enterprise’s procure-to-pay and AP processes in one fell swoop is not exactly a popular choice with clients. Instead, solution providers may want to take an incremental approach for these corporates, beginning with one unit and working outward. That’s because there’s another massive challenge that large enterprises face when looking to transform AP: integration, across back-office platforms and, especially for the large multinational corporates, across business units and geographies.

Wright emphasized the role of collaboration with other industry players, as well as a focus on integration, to facilitate a flexible and gradual change for the enterprise. Chief financial officers, he added, are finally warming up to this strategy, too.

“Until the past few years, many corporates have looked at this myriad of systems of technology they have to link up, and they say, ‘My gosh, that’s really hard I think we’ll just continue to do what we’re doing,'” Wright said. “We’re starting to see a trend where CFOs are saying it’s time to actually look at the marketplace and identify service providers addressing this specifically.”

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